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State House Inn Corp. v. Polikoff

AUGUST 4, 1967.

THE STATE HOUSE INN CORPORATION, AN ILLINOIS CORPORATION, PLAINTIFF-APPELLANT,

v.

BEN POLIKOFF, ET AL., DEFENDANTS-APPELLEES.



Appeal from the Circuit Court of Cook County; the Hon. JOHN J. LUPE, Judge, presiding. Affirmed.

MR. PRESIDING JUSTICE MURPHY DELIVERED THE OPINION OF THE COURT.

Rehearing denied September 14, 1967.

This is a declaratory judgment action in which plaintiff, an Illinois corporation, seeks a declaratory decree that it is the owner of all of the assets of a joint venture known as The State House Inn. The trial court granted the motion of the principal defendant, Ben Polikoff, for a summary decree of dismissal, and plaintiff appeals. No evidence was heard, and the material facts are set forth in the pleadings and exhibits.

In 1959 and 1960, Polikoff gave $57,500 to Maurice Levy, Louis C. Rappaport, Harry Miller and Sidney Miller, the four originators of a motel project in Springfield, Illinois. Approximately 49 other persons also gave money for the project. In Polikoff v. Levy, 55 Ill. App.2d 229, 204 N.E.2d 807 (1965), this court found the undertaking to be a joint venture "to buy real estate and construct and operate a motel and to share in the profits," with a relationship so similar to that of partners that their rights and liabilities were to be tested by the same rules.

The instant complaint, filed September 30, 1963, shows that in June, 1961, "Articles of Limited Partnership" were signed by defendant Ben Polikoff. Later Polikoff "refused to execute the required Certificate of Limited Partnership, and the same never became effective under the laws of Illinois."

The complaint alleges that on February 3, 1962, a charter was issued for the plaintiff corporation, "and plaintiff thereupon took over the operation of the `State House Inn'; the assets of the enterprise were transferred to plaintiff by appropriate written instruments, and common stock issued by plaintiff to all the co-venturers in accordance with said resolution. Defendant Ben Polikoff and the said Alexander Polikoff have refused to accept the stock certificates tendered to them by plaintiff, and by his letter dated July 19, 1962, said defendant has disavowed his interest in the venture, and has determined all his transactions therein to be `abrogated, annulled and at an end.'" A photostatic copy of the letter was made a part of the complaint.

The prayer of the complaint was for a declaratory decree "finding plaintiff to be solely entitled to the ownership of all of the assets of the enterprise aforesaid and the `State House Inn,'" and that Polikoff be directed to join in necessary written directions to a trustee "to convey all its right, title and interest in and to the property of said Trust to plaintiff."

Polikoff filed a motion for summary decree on the ground that the property owned jointly by the members of the joint venture could not, as a matter of law, be validly transferred without the consent of all the joint venturers. The plaintiff also filed a motion for a summary decree. Polikoff's motion for a summary decree of dismissal was granted by the trial court, and judgment was entered against the plaintiff. The instant appeal followed.

The July 19, 1962, letter of Ben Polikoff, made a part of the complaint and addressed to the four originators, is as follows:

"DEMAND FOR REPAYMENT OF $57,500.00 AND NOTICE AND TENDER PURSUANT TO THE ILLINOIS SECURITIES LAW OF 1953, AS AMENDED.

"I hereby demand that you repay me the $57,500.00 I gave you as per three receipts bearing dates and for the amounts as follows: December 7, 1959, $25,000.00; February 2, 1960, $25,000.00; December 7, 1960, $7,500.00.

"Notice is given that the transactions in which I gave you said $57,500.00 are voidable, and abrogated, annulled and at an end.

"Said transactions related to a motel in Springfield, Illinois, which is referred to, in the first of said receipts, as `State House Motor Motel' and, in the second and third receipts, as `State House Motor Hotel.'

"I hereby tender to you the `securities sold' (as defined in The Illinois Securities Law of 1953, as amended), including said receipts given me for the money I gave you; and I also tender and offer to give you an assignment, quit claim deed, disclaimer, and such other instruments sufficient to effect the relinquishment of any interest in said motel (or hotel) and in all appurtenances thereto, and in all furniture and equipment therein, and in the parking lot or so-called `vacant lot,' which you may suppose I have by virtue of such transactions, or otherwise."

Subsequent to the writing of the letter, Polikoff brought suit, contending that the transaction came within the meaning of the Illinois Securities Law of 1953 and of the Federal Securities Act of 1933, and that since the sale had not been registered with the appropriate state and federal agencies, he was entitled to avoid the same and recover the payments he had made. In Polikoff v. Levy, 55 Ill. App.2d 229, 204 N.E.2d 807, this court held that Polikoff had entered into a joint venture relationship and the securities law did not apply.

Both sides have asserted a number of contentions which do not require discussion, because of our concept of the principles to be applied to the ...


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